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Mapletree Commercial Trust’s (MCT) gross revenue increased by 1.9 percent on an annual basis to S$287.76 million for the financial year between April 2015 and March 2016 (FY15/16). Net property income (NPI) rose 4.3 percent to S$220.71 million.
According to a Credit Suisse report, the better gross revenue is due to higher rents at VivoCity and Merrill Lynch Harbourfront (MLHF), while the improved NPI was achieved on the back of lower utilities and advertising expenses.
Distributable income also climbed by 2.5 percent year-on-year to S$172.5 million, whereas distribution per unit (DPU) grew by only 1.6 percent from 8 cents to 8.13 cents.
There is a lower DPU growth because the latest distribution would release more shares than cash due to the dividend reinvestment plan (DRP), which allows unitholders to acquire additional MCT units by opting to receive all or part of their dividends in the form of units instead of cash. DRP will be discontinued starting next quarter.
In addition, MCT’s investment properties were revalued at around S$4.3 billion as of 31 March, representing a gain of 3.4 percent from the same period a year ago, said Sharon Lim, CEO of the trust’s manager, Mapletree Commercial Trust Management Ltd.
For the March-ended quarter, gross revenue climbed by 2.8 percent to S$72.99 million on a quarterly basis, NPI increased by 3.5 percent to S$55.04 million, distributable income edged up 1.8 percent to S$42.92 million, whereas DPU rose slightly by 1.0 percent.
Credit Suisse also noted that the trust’s overall office occupancy slipped in Q4 FY15/16 as actual occupancy levels in Mapletree Anson and PSA Building slid to 91 percent and 92.8 percent respectively. But their committed occupancy levels are still high at 94.7 percent and 98.5 percent.
For VivoCity mall, the overall committed occupancy remains stellar at 99.9 percent for the quarter under review.
For MLHF, its anchor tenant Bank of America has renewed and restructured its lease in April 2016. Under the recently signed agreement, the company renewed for six years at positive reversions, but one floor measuring about 46,000 sq ft will be made vacant by January 2017, providing MCT around nine months to market the space.
Given these factors, Credit Suisse said it is optimistic about the trust’s prospects.
“We have an ‘outperform’ [rating] on MCT and like it for its strong asset quality in VivoCity, while the restructuring of the MLHF lease creates more certainty over the bulk of the expiring space and gives management time to tenant out the expected vacancy.”
Image: Mapletree Commercial Trust’s VivoCity.
Nikki De Guzman, Editor at CommercialGuru, edited this story. To contact her about this or other stories email nikki@propertyguru.com.sg
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